Should you invest in Nykaa's shares post bumper listing?

FSN E-Commerce Ventures, the operator of Nykaa and Nykaa Fashion chain, made a stellar debut on bourses on Wednesday. Shares of the company listed at a premium of nearly 78 per cent at Rs 2,001 on the BSE against the issue price of Rs 1,125. Likewise, the scrip listed at a premium of 79 per cent at Rs 2,018 on the NSE.

However, the benchmark BSE Sensex traded 316 points, or 0.52 per cent, lower at 60,117 in the morning trade.
 
Is it the right time to accumulate Nykaa shares post listing? Rahul Sharma, co-founder, Equity99 said, “It is among the rare lucrative new edge businesses.  Furthermore, it is a high-growth company and into the right business where it may remain to grow in double digits for many years. We are bullish on this counter and see it as a good bet for the long term.”
 
He further added that investors might book some quantity considering the bumper listing premium and keep remaining shares for the long term.  Anyone who wishes to enter fresh shall wait for little declines near Rs 1,900-1,850 levels. One should keep a stop loss at Rs 1,650 for the target price of Rs 2,600.
 
Earlier, the Rs 5,352-crore initial public offering was opened for subscription on October 28. The issue got subscribed nearly 82 times on the last day of subscription on November 1, aided by the strong response from qualified institutional buyers (QIB) and non-institutional investors (NII).

The quota reserved for QIBs got subscribed 91.18 times, while the category reserved for NII received a subscription of 112 times. The portion reserved for retail investors also got oversubscribed 12 times. The category reserved for employees was subscribed 1.88 times, data available on BSE showed.
 
FSN E-Commerce has a diverse portfolio of beauty, personal care and fashion products, including its owned brand products manufactured by the company. Nykaa offers an omni-channel experience to consumers. It operates its businesses primarily through arrangements with beauty, personal care and fashion brands, delivery companies, manufacturers, distributors and other vendors, including suppliers of packaging material. Most of the brokerages gave ‘Subscribe’ rating to the issue.
 
Commenting on the further movement of Nykaa, Santosh Meena, head of research, Swastika Investmart said, “We are expecting upside momentum, [which] may continue for at least 1-2 days then it may stabilise for some time because valuation could be a concern after a big listing gain. However, Rs 2,000 could act as a support level in the near term. It may head towards Rs 2,100 and 2,200 even after a robust debut. Aggressive investors are advised to hold this stock for the long term because it is one of the few stocks in new edge companies to own into your portfolio.” He further added that new investors can accumulate in the stock in parts.

Also read: Nykaa crosses Rs 1 lakh crore market cap on listing day

Also read: Nykaa makes strong market debut, stock lists at 79% premium to issue price